New York state is going to try to get “certain” out-of-state Internet retailers to collect sales tax from their New York customers, according to this report from CBS.
It’s not clear why New York thinks it has jurisdiction to get out-of-state retailers to do anything. Can someone please explain this to me?
My personal opinion is that if states want sales tax collected on Internet purchases, then the tax should be collected in and paid to the state where the retailer is located, not where the customer is, since the latter would create a nightmare of bookkeeping and compliance issues.
Would you like to file sales tax returns for every state? I didn’t think so. Not to mention all the cities and counties that have their own sales taxes.
If I travel to a physical store in California and buy something, I pay sales tax to that state, not mine… so why does New York think a company in Washington should collect tax from New York residents?
Doesn’t make much sense, does it? But then, when the government is involved, things rarely make sense.
What do you think about this? Post your comment below.
4 responses so far ↓
1 Floyd Fisher // Apr 28, 2008 at 11:43 pm
Actually, if you read the law, people of NY are required to pay what is called a ‘use tax’ (in lieu of sales tax) on such purchases. The tax rate is the same as the state sales tax, and believe it or not, it’s been upheld by the Supreme Court.
There has been a line in the NY tax forms for ages for people to pay this use tax, but obviously not enough people are declaring this. So NY can either force e-tailers to give them the purchase data (and then send residents the tax bill), or they can get the net retailers to collect said tax at the till.
All I can say is if they can pull this off, more power to them. All I can do is campaign for the law to get changed.
2 Chris // May 4, 2008 at 11:41 am
Floyd. you didn’t explain how NY would have the authority to force companies to do what you suggest, which was my point.
3 james d granata // Nov 12, 2008 at 8:53 am
how can I join an organization that would focus on removing use tax and sales tax on used items?
4 Chris // Nov 12, 2008 at 4:38 pm
James, that’s a good question. I don’t know of such an organization, but there probably is one.
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